Bartlett Market Week
Market Week: November 30, 2009
The Markets
When U.S. investors were slicing up turkey, most European markets were slicing off 3% or more on unsettling news from Dubai. After hitting their highest levels in over a year earlier in the week, U.S. markets fell in response when they reopened for a half-day Friday; the almost 1.5% drop in the Dow wiped out all of the week's gains. However, the recent rotation into large-cap stocks continued as the small-cap Russell 2000 took the biggest hit for the week while the S&P 500 ended the week where it began.
Note: Market indexes listed are unmanaged and are not available for direct investment.
Last Week's Headlines
- Homebuyers rushing to beat the deadline for the first-time homebuyers tax credit (before it was extended) helped push October home resales up by 10.1% from the previous month, to a level not seen since February 2007, according to the National Association of Realtors. If October's pace kept up for a full year, it would represent the sale of 6.1 million existing homes. Distressed properties, which accounted for 30% of October resales, continued to weigh on the median home resale price, which at $173,100 was down 7.1% from last October.
- Overseas markets were hardly thankful for the Thanksgiving Day news that state-run Dubai World plans to restructure and wants to delay payments on $60 billion worth of debt for six months. The announcement raised questions about bank exposure to derivatives based on that debt as well as potential problems with other sovereign debt, particularly in emerging markets.
- Personal incomes rose in October by 0.2%--the fourth consecutive month of increases. Spending also increased 0.7% from the month before, though the month-to-month comparison is affected by the substantial drop in September's spending that resulted from the end of the "cash for clunkers" program.
- The 3.5% growth rate initially reported for the third quarter by the Commerce Department was revised downward to 2.8%, though it's still the strongest in two years.
- October durable goods orders were down 0.6%, primarily because of weaker demand for machinery and defense equipment.
- The dollar hit a 15-month low against the euro and a 14-month low against the Japanese yen before jitters over Dubai led global investors to begin unwinding riskier currency bets, bolstering both currencies a bit. The spot gold price continued to hit new records, reaching $1,194.50 an ounce on Thursday before falling back.
- New U.S. home sales were up 6.2% from September, and up 5.1% from a year ago. The South saw the highest jump, with a 23.2% increase.
Eye on the Week Ahead
Traders returning to their desks will be trying to figure out whether the negative sentiment at week's end will carry over, and whether that would represent a bad omen for global credit stability or a buying opportunity. Friday's unemployment figures will be watched for their implications for the holiday shopping season.
Key data releases: Auto and pending home sales, manufacturing (12/1); productivity (12/3); unemployment/payrolls (12/4).
Data source: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.
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